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India

CALCULATION OF BONUS POST AMENDMENT

*CALCULATION OF BONUS POST AMENDMENT*

*CRITERIA*

*Eligibility Limit*

The eligibility limit has been raised from Rs.10000 to Rs.21000/-. The employees who draw a salary upto Rs.21000 per month would be eligible for bonus.

*Calculation of Bonus*

The wage ceiling for calculating bonus has been raised from Rs.3500 to Rs.7000 per month or the minimum wage for the sceduled employment, whichever is higher

*EXAMPLE FOR CONTRACT EMPLOYEES*

*If Minimum wage is higher than 7000*

Aman is working as Fitter in one of the Pharma Company at Mumbai thru one of the contractor. He is paid wages as per the minimum wages. The minimum wage in Maharashtra for Skilled Category for Pharma is Rs.10164/-

*Calculation of Bonus*

Basic Salary x 8.33% = Bonus p.m.

10164  x  8.33% = 847 ( 10164 p.a.)

Here, the minimum wage is higher than Rs.7000 hence we have considered the min wage which is higher than Rs.7000 for calculating the bonus. So the ceiling of Rs.7000 is not apllicable in this case*

For contract employees, we have to pay bonus on the criteria which is higher.

*EXAMPLES FOR CTC EMPLOYEES*

For CTC employees, they have fixed structure of pay which consists many components where the gross salary is much higher than minimum wages. It is not governed by minimum wages. We always ensure that CTC Emps are paid much higher than Min Wages.

1) *If Basic Salary is less than 7000 & also less than Min Wages*

Karan is working as Accounts Clerk in one of the Pharma Company at Mumbai. His basic salary is 6800/- per month. The minimum wage in Maharashtra for Skilled Category for Pharma is Rs.10164/-

*Calculation of Bonus*

Basic Salary x 20% = Bonus p.m.

6800  x  20%  =  1360 (16320 p.a.)

6800  x  8.33% = 566 ( 6792 p.a.)

*Here, the basic salary is less than Rs.7000 hence we have considered the actual basis salary of Rs.6800 for calculating the bonus. So the ceiling of Rs.7000 or higher the minimum wagrs is not apllicable in this case*

*EXAMPLE 2*

*If Basic Salary is higher than Rs.7000 but less than Min Wages*

Rajendra is working as Stores Officer in one of the Chemical Fertilizer Company at Mumbai. His basic salary is 8500/- per month. The minimum wage in Maharashtra for Skilled Category  for Chemical Fertilizer Company is Rs.6903/-

*Calculation of Bonus*

Basic Salary x 20% = Bonus p.m.

7000  x  20%  =  1400 (16800 p.a.)

7000  x  8.33% = 583 ( 6996 p.a.)

*Here, the basic salary is more than 7000 and also min wages hence we have considered Rs7000 basis for calculating the bonus. So the ceiling of Rs.7000 is higher than the minimum wages, hence 7000 criteria  is apllicable in this case*

*EXAMPLE 3*

*If Basic Salary is higher than 7000 & also higher than Min Wages*

Vivek is working as Sales Officer in one of the Bank  at  Delhi. His basic salary is 15000/- per month. The minimum wage in Delhi for Skilled Category  in Shops & Commercial Estt. is Rs.12662/-

*Calculation of Bonus*

Basic Salary x 20% = Bonus p.m.

12662 x  20%  =  2532 (30384 p.a.)

7000  x  8.33% = 1055 ( 12660 p.a.)

*Here, the basic salary is more than 7000 and also higher than min wages hence we have considered the min wage of Rs.12662 basis for calculating the bonus. So the ceiling of Rs.7000 is not apllicable since min wages are higher, hence 12662 criteria is apllicable in this case*

Hope the above examples will help you to understand the calculation. In case of any query, would be happy to answer the same.

*CURRENT STATUS*

*VERDICT BY HIGH COURTS*

About 12 out of 16 High Courts have given stay on retrospective effect on implementation of amendment. High Courts include Bombay, Karnataka, Allahabad, Madras, Kerala, Punjab ,Haryana, Rajasthan, Gujarat, Madhya Pradesh, Calcutta and Andhra Pradesh have also passed ad interim orders staying the retrospective operation of the Amendment Act.

The Govt has initiated action to move the matter in Supreme Court against the stay orders given by 12 High Courts. Hope we will get the clarity on it very soon before Diwali when majority companies pay Bonus to their employees.

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